☒ QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For
the quarterly period ended December 31, 2014

☐ TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For
the transition period from ____________ to ____________

Commission
file number: 000-53744

SITO
MOBILE LTD.

(Exact
name of small business issuer as specified in its charter)

Delaware

13-4122844

(State
or other jurisdiction of

incorporation
or organization)

(IRS
Employer

Identification
No.)

100
Town Square Place, Suite 204

Jersey
City, NJ 07310

(Address
of principal executive offices)

(201)
275-0555

(Registrants
telephone number, including area code)

____________________________n/a_________________________________

(Former
name, former address and former fiscal year, if changed since last report)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company; as defined within Rule 12b-2 of the Exchange Act.

☐

Large
accelerated filer

☐

Accelerated
filer

☐

Non-accelerated
filer

☒

Smaller
reporting company

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The
number of shares outstanding of each of the issuer's classes of common equity as of February 3, 2015: 153,698,166 shares
of common stock.

Contents

Page

Number

PART I

FINANCIAL INFORMATION

Item 1

Financial Statements

Condensed Consolidated
Balance Sheets as of December 31, 2014 (unaudited) and September 30, 2014

1

Condensed Consolidated
Statement of Operations for the Three Months Ended December 31, 2014 and 2013 (unaudited)

3

Condensed Consolidated
Statement of Stockholder's Equity for the Three Months Ended December 31, 2014 (unaudited) and for the Fiscal
Year Ended September 30, 2014

4

Condensed Consolidated
Statement of Cash Flows for the Three Months Ended December 31, 2014 and 2013 (unaudited)

FOR THE
THREE MONTHS ENDED DECEMBER 31, 2014 AND FOR THE YEAR ENDED SEPTEMBER 30, 2014

Additional

Common Stock

Paid-in

Accumulated

Shares

Amount

Capital

Deficit

Total

Balance - September 30, 2013

137,220,231

$

137,220

$

130,886,161

$

(129,899,017

)

$

1,124,364

Shares issued on exercise of stock options

3,745,957

3,746

1,683,705

1,687,451

Shares issued on exercise of stock warrants

2,026,500

2,027

211,430

213,457

Shares issued in debt conversions

100,000

100

49,900

50,000

Shares issued for officer compensation

25,000

25

14,475

14,500

Compensation recognized on option and warrant grants

-

-

998,917

998,917

Purchase of common shares presented for retirement

(389,060

)

(389

)

(201,072

)

(201,461

)

Shares issued in the acquisition of DoubleVision

8,000,000

8,000

3,272,000

3,280,000

Net loss for the year ended September 30, 2014

-

-

-

(4,510,514

)

(4,510,514

)

Balance - September 30, 2014

150,728,628

150,729

136,915,516

(134,409,531

)

2,656,714

Sale of shares for cash

2,619,539

2,619

997,381

1,000,000

Compensation recognized on option and warrant grants

93,772

93,772

Net loss for the three months ended December 31, 2014

(536,251

)

(536,251

)

Balance - December 31, 2014

153,348,167

$

153,348

$

138,006,669

$

(134,945,782

)

$

3,214,235

See accompanying
notes.

4

SITO
Mobile, Ltd.

UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

December 31,

2014

2013

Cash Flows from Operating Activities

Net loss

$

(536,251

)

$

(1,051,733

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation expense

24,174

22,133

Amortization expense - software development costs

123,547

94,069

Amortization expense - patents

41,023

33,555

Amortization expense - discount of debt

128,897

97,844

Amortization expense - deferred costs

11,264

-

Loss on disposition of assets

2,950

-

Stock based compensation

180,814

841,706

(Increase) decrease in assets:

(Increase) in accounts receivable, net

(715,649

)

(839,605

)

Decrease in prepaid expenses

67,078

32,019

(Increase) in other assets

(50,655

)

(2,290

)

Increase (decrease) in liabilities:

Increase (decrease) in accounts payable

737,907

(320,493

)

Increase (decrease) in accrued expenses

(119,839

)

664,193

Increase in deferred revenue

374,067

-

Increase (decrease) in accrued interest

(506,031

)

70,322

Net cash used in operating activities

(236,704

)

(358,280

)

Cash Flows from Investing Activities

Patents applications costs

(119,067

)

(24,771

)

Purchase of property and equipment

(21,843

)

(45,655

)

Capitalized software development costs

(246,791

)

(97,403

)

Net cash used in investing activities

$

(387,701

)

$

(167,829

)

See accompanying
notes.

5

SITO
Mobile, Ltd.

UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

December 31,

2014

2013

Cash Flows from Financing Activities

Proceeds from issuance of common stock

$

1,000,000

$

1,825,198

Purchase of Company's common stock

-

(150,413

)

Proceeds from issuance of debt

8,205,816

-

Principal reduction on obligation under capital lease

(4,924

)

(4,052

)

Principal reduction on convertible debt

(3,708,000

)

-

Net cash provided by financing activities

5,492,892

1,670,733

Net increase in cash

4,868,487

1,144,624

Cash - Beginning balance

620,185

1,146,995

Cash - Ending balance

$

5,488,672

$

2,291,619

Supplemental Information:

Interest expense paid

$

781,143

$

24,782

Income taxes paid

$

-

$

-

Non-cash
investing and financing activities:

For the three months
ended December 31, 2014

During the three months ended
December 31, 2014, the Company issued 2,619,539 shares of its common stock to Fortress Credit Co LLC at $0.3817 per share for an
aggregate amount $1,000,000.

On October 21, 2014, the
Company entered into a capital lease agreement to purchase a copy machine in the amount of $13,160 payable over a 48-month term.

During the three months ended
December 31, 2014, the Company accrued an additional $1,000,000 in purchase price consideration in connection with the acquisition
of DoubleVision Networks Inc. ("DoubleVision"). Under the terms of the Purchase and Sale Agreement, the earn-out provision
could cause the Company to issue additional shares of the Company’s common stock equal to $1,000,000 (valued at the average
closing price for the ninety days ending July 31, 2015) to the former DoubleVision shareholders if the Company’s media placement
revenues for the twelve-month period from August 1, 2014 to July 31, 2015 are at least $3,000,000, subject to certain conditions
such as receipt of customer payments and achievement of a gross margin threshold. In anticipation of meeting this threshold, an
additional $1,000,000 was accrued.

During the three months ended
December 31, 2014, the Company recognized stock-based compensation expense totaling $180,814, of which $99,267 was recognized through
the vesting of 1,250,000 common stock options, and $81,547 from the amortization of prepaid consulting fees compensated through
the granting of 5,750,000 options.

For the three months
ended December 31, 2013

During the three months ended
December 31, 2013, the Company issued 147,981 shares of its common stock through cashless exercises of 1,166,476 stock options
granted to employees.

During the three months ended
December 31, 2013, the Company issued 25,000 shares of its common stock to its current Chief Financial Officer pursuant to his
employment agreement.

See accompanying notes.

6

SITO MOBILE, LTD.

NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.

Organization, History and Business

SITO
Mobile, Ltd. (“the Company”) was incorporated in Delaware on May 31, 2000, under its original name, Hosting Site Network,
Inc. On May 12, 2008, the Company changed its name to Single Touch Systems, Inc. and on September 26, 2014, it changed its name
to SITO Mobile, Ltd.

The
Company provides a mobile engagement platform that enables brands to increase awareness, loyalty, and ultimately sales.

2.

Summary of Significant Accounting Policies

Reclassification

Certain
reclassifications have been made to conform the 2014 amounts to the 2015 classifications for comparative purposes.

The
Company considers cash and cash equivalents to include all stable, highly liquid investments with maturities of three months or
less.

Accounts
Receivable, net

Accounts
receivable are reported at the customers’ outstanding balances, less any allowance for doubtful accounts. Interest is not
accrued on overdue accounts receivable.

Allowance
for Doubtful Accounts

An
allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance
for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the
adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts
receivable are charged off against the allowance when collectability is determined to be permanently impaired.

Property
and Equipment, net

Property
and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance
and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment
are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts.
Gains or losses from retirements or sales are credited or charged to income.

Depreciation
is computed on the straight-line and accelerated methods for financial reporting and income tax reporting purposes based upon
the following estimated useful lives:

Software development

2- 3 years

Equipment

5 years

Computer hardware

5 years

Office furniture

7 years

Long-Lived
Assets

The
Company accounts for its long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05,
“Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets
be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an
asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future
net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the
carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and
fair value or disposable value. The Company determined that none of its long-term assets at December 31, 2014 were impaired.

7

SITO MOBILE, LTD.

NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Capitalized
Software Development Costs

The
Company capitalizes internal software development costs subsequent to establishing technological feasibility of a software application.
Capitalized software development costs represent the costs associated with the internal development of the Company’s software
applications. Amortization of such costs is recorded on a software application-by-application basis, based on the greater of the
proportion of current year sales to total of current and estimated future sales for the applications or the straight-line method
over the remaining estimated useful life of the software application. The Company continually evaluates the recoverability of
capitalized software costs and will charge to operations amounts that are deemed unrecoverable for projects it abandons.

Convertible
Debentures

If
the conversion features of conventional convertible debt provides for a rate of conversion that is below market value at issuance,
this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt
discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances,
the convertible debt is recorded net of the discount related to the BCF, and the Company amortizes the discount to interest expense
over the life of the debt using the effective interest method.

Capital
Leases

Assets
and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair
value of the leased assets. The assets are depreciated over the lower of their related lease terms or their estimated productive
lives. Depreciation of the assets under capital leases is included in depreciation expense.

Income
Taxes

The
Company accounts for its income taxes under the provisions of ASC Topic 740, “Income Taxes.” The method of
accounting for income taxes under ASC 740 is an asset and liability method. The asset and liability method requires the recognition
of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and
financial reporting bases of other assets and liabilities. The Company had no material unrecognized income tax assets or liabilities
for the three months ended December 31, 2014 or for the three months ended December 31, 2013. The Company recognizes income tax
interest and penalties as a separately identified component of general and administrative expense. During the three months ended
December 31, 2014 and 2013, there were no income taxes, or related interest and penalty items in the income statement, or liabilities
on the balance sheet.

Stock
Issuances Involving Non-cash Consideration

All
issuances of the Company’s stock for non-cash consideration have been assigned a dollar amount equaling the market value
of the shares issued on the date the shares were issued for such services and property. The non-cash consideration paid pertains
to consulting services and the acquisition of a software license (See Notes 5, 7 and 20).

Revenue
Recognition

Revenue
is derived on a per message/notification basis through the Company’s patented technologies and a modular, adaptable platform
designed to create multi-channel messaging gateways for all types of connected devices. The Company also earns revenue for services,
such as programming, licensure on Software as a Service (“SaaS”) basis, and on a performance basis, such as when a
client acquires a new customer through our platform. Revenue is recognized in accordance with Staff Accounting Bulletin (“SAB”)
No. 101, “Revenue Recognition in Financial Statements,” as revised by SAB No. 104. As such, the Company recognizes
revenue when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable,
and collectability is probable. Sales are recorded net of sales discounts.

Stock
Based Compensation

The
Company accounts for stock-based compensation under ASC Topic 505-50, formerly Statement of Financial Accounting Standards (“SFAS”)
No. 123R, "Share-Based Payment” and SFAS No. 148, "Accounting for Stock-Based Compensation - Transition
and Disclosure - An amendment to SFAS No. 123.” These standards define a fair-value-based method of accounting for
stock-based compensation. In accordance with SFAS Nos. 123R and 148, the cost of stock-based compensation is measured at the grant
date based on the value of the award and is recognized over the vesting period. The value of the stock-based award is determined
using the Binomial or Black-Scholes option-pricing models, whereby compensation cost is the excess of the fair value of the award
as determined by the pricing model at the grant date or other measurement date over the amount that must be paid to acquire the
stock. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive
the benefit, which is generally the vesting period.

8

SITO
MOBILE, LTD.

NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Loss
per Share

The
Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic
earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number
of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that
the denominator is increased to include the number of additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive. Diluted loss per share has not been presented
since the effect of the assumed conversion of warrants and debt to purchase common shares would have an anti-dilutive effect.
Potential common shares as of December 31, 2014 that have been excluded from the computation of diluted net loss per share amounted
to 31,404,000 shares and include 9,889,500 warrants and 21,514,500 options. Potential common shares as of December 31, 2013 that
have been excluded from the computation of diluted net loss per share amounted to 52,496,500 shares and included 13,791,000 warrants,
30,849,500 options, and $3,928,000 of debt and accrued interest convertible into 7,856,000 shares of the Company’s common
stock.

Concentrations
of Credit Risk

The
Company primarily transacts its business with one financial institution. The amount on deposit in that one institution may from
time to time exceed the federally-insured limit.

Of
the Company’s revenue earned during the three months ended December, 2014, approximately 64% was generated from contracts
with eight customers covered under the Company’s master services agreement with AT&T. Of the Company’s revenue
earned during the three months ended December, 2013, approximately 74% was generated from contracts with nine customers covered
under the Company’s master services agreement with AT&T.

The
Company’s accounts receivable are typically unsecured and are derived from U.S. customers in different industries. The Company
performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. Historically, such
losses have been within management’s expectations. As of December 31, 2014 and 2013, one customer’s accounted for
51% and 98%, respectively, of the Company’s net accounts receivable balance, respectively.

Use
of Estimates

The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Business
Combinations

The
Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and
liabilities are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value
of assets acquired, net of liabilities assumed is recognized as goodwill. Certain adjustments to the assessed fair
values of the assets, liabilities made subsequent to the acquisition date, but within the measurement period, which is up to one
year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income.
Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition
onward and include amortization expense arising from acquired tangible and intangible assets. The Company expenses all costs
as incurred related to an acquisition under general and administrative in the consolidated statements of operations.

Recent
Accounting Pronouncements

The
Company has not identified any recently issued accounting pronouncements that are expected to have a material impact on its financial
statements.

3.

Accounts Receivable, net

Accounts
receivable consist of the following:

December 31,

September 30,

2014

2014

Accounts receivable

$

3,616,834

$

2,901,672

Less allowance for bad debts

(2,878

)

(8,364

)

$

3,613,956

$

2,893,308

Current portion

$

3,388,956

$

2,443,308

Long-term portion

$

225,000

$

450,000

9

SITO MOBILE, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On
November 12, 2013, the Company entered into an agreement with an unrelated third party regarding its usage since October 2010
of certain Company patented intellectual property. Under the agreement, the Company receives a total of $750,000 and granted extended
payment terms that consist of a $100,000 payment received in November 2013, a $200,000 payment received in November 2014, a $225,000
payment to be received in November 2015 and a $225,000 payment to be received in November 2016. The Company has no obligations
under the agreement.

4.

Property and Equipment, net

The
following is a summary of property and equipment:

December 31,

September 30,

2014

2014

Computer equipment

$

551,990

$

855,289

Equipment

-

46,731

Office furniture

98,986

135,701

Equipment held under capital lease

66,272

53,112

717,248

1,090,833

Less: accumulated depreciation

(472,664

)

(854,127

)

$

244,584

$

236,706

Depreciation
expense for the three months ended December 31, 2014 and 2013 was $24,174 and $22,133, respectively.

5.

Prepaid Consulting

Pursuant
to the terms of a Consulting Agreement entered into in 2012, the Company's Executive Chairman at the time personally granted options
to a third party to purchase a total of 5,750,000 shares of the Company’s common stock that he owned in exchange for consulting
services provided by the third party that directly benefited the Company (the “Former Chairman Options”). Of the 5,750,000
Former Chairman Options, 3,750,000 had an exercise price of $0.295 per share and 2,000,000 had an exercise price of $0.48 per
share. The Former Chairman Options granted under the Consulting Agreement expired two years from their dates of grant in October
and December 2012. In addition, the term of the Consulting Agreement expired in December 2014, The Company recorded the $847,300
fair value of the Former Chairman Options as contributed capital with an offset to prepaid consulting expense that was amortized
to operations over the two-year term of the consulting agreement. The Company’s value of $847,300 was determined using a
Binomial Option model based upon an expected life of 5 years, trading prices ranging from $0.30 to $0.46 per share, a risk free
interest rate ranging from 0.25% to 0.30%, and expected volatility ranging from 89.348% to 90.201%.

In
September 2013, the Company, its former Executive Chairman and the above-indicated third party entered into an agreement, whereby
the Company granted options to the third party that have the same terms as the Former Chairman Options in exchange for the third
party’s assignment of its interest in the Former Chairman Options to the Company. The Company valued the options granted
to the third party in September 2013 at $718,871 and added the cost to the remaining unamortized prepaid consulting expense from
the Former Chairman Options. The total was amortized to operations over the term of the consulting agreement. Consulting fees
charged to operations for the three months ended December 31, 2014 and 2013 was $81,547 and $272,611, respectively. As of December
31, 2014, the prepaid consulting expense was fully amortized to operations.

6.

Capitalized Software Development Costs, net

The
following is a summary of capitalized software development costs:

December 31,

September 30,

2014

2014

Beginning balance

$

639,416

$

343,575

Additions

246,792

712,450

Amortization

(123,547

)

(416,609

)

Charge offs

-

-

Ending balance

$

762,661

$

639,416

Amortization
expense for the three months ended December 31, 2014 and 2013 was $123,547 and $94,069, respectively.

As
of December 31, 2014, amortization expense for the remaining estimated lives of these costs is as follows:

Year Ending
December 31,

2015

$

441,088

2016

241,188

2017

80,385

$

762,661

10

SITO MOBILE, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7.

Intangible Assets

Patents

The
following is a summary of capitalized patent costs:

December 31,

September 30,

2014

2014

Patent costs

$

1,154,980

$

1,135,964

Amortization

(729,560

)

(688,537

)

$

425,420

$

447,427

Amortization
expenses for the three months ended December 31, 2014 and 2013 was $40,570 and $33,555 respectively.

A
schedule of amortization expense over the estimated remaining lives of the patents is as follows:

Year Ending
December 31,

2015

$

164,997

2016

157,835

2017

51,918

2018

16,505

2019

12,962

Remainder

21,203

$

425,420

Software
license

On
March 30, 2012, the Company acquired an exclusive perpetual license to utilize the “Anywhere” software and related
source code from Soap Box Mobile, Inc. (“Soapbox”), a company in which the Company’s Executive Chairman at the
time owned a majority preferred interest of the license grant. The Company paid $785,000 in cash and 200,000 shares of Company
common stock for the exclusive perpetual license, of which the former Executive Chairman received $755,000 under terms of a November
27, 2012 agreement. The Company has valued the license at $831,000, which consists of the $785,000 in cash consideration and the
$46,000 fair value assigned to the 200,000 shares of Company common stock. The perpetual license is a long-term asset that is
not subject to amortization.

Goodwill

On
July 24, 2014, the Company and DoubleVision and the shareholders of the DoubleVision entered into a Share Purchase Agreement
pursuant to which the Company acquired all of the shares of DoubleVision. The Company paid $3,600,000 for DoubleVision
by issuing 8,000,000 shares of the Company’s common stock to DoubleVision’s shareholders and paid $400,000 to one
of DoubleVision’s creditors that resulted in the Company recognizing $3,482,884 in goodwill. The Share Purchase
Agreement has an earn-out provision that could cause the Company to issue additional shares of the Company’s common
stock equal to $1,000,000 (valued at the average closing price for the ninety days ending July 31, 2015) as additional
purchase price consideration if the Company’s media placement revenues for the twelve-month period from August 1, 2014
to July 31, 2015 are at least $3,000,000, subject to certain conditions such as receipt of customer payments and achievement
of a gross margin threshold. In anticipation of achieving the conditions for payment of the earn-out amount, the Company has
accrued $1,000,000 in purchase price payable liability and increased goodwill to $4,482,884 as of December
31, 2014.

8.

Accrued Expenses

The
following is a summary of accrued expenses:

December 31,

September 30,

2014

2014

Accrued applications costs

$

249,532

$

171,732

Accrued payroll and related expenses - unrelated parties

153,421

125,910

Accrued professional fees

143,423

202,680

Other accrued expenses

800

800

$

547,176

$

501,122

11

SITO MOBILE, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9.

Purchase Price Payable

During
the three months ended December 31, 2014, the Company accrued an additional $1,000,000 in purchase price consideration in connection
with the acquisition of DoubleVision. The Share Purchase Agreement has an earn-out provision that could cause the Company to issue
additional shares of the Company’s common stock equal to $1,000,000 (valued at the average closing price for the ninety
days ending July 31, 2015) as additional purchase price consideration if the Company’s media placement revenues for the
twelve-month period from August 1, 2014 to July 31, 2015 are at least $3,000,000, subject to certain conditions such as receipt
of customer payments and achievement of a gross margin threshold. In anticipation of achieving the conditions for payment of the
earn-out amount, an additional $1,000,000 has been accrued.

10.

Capital Leases

The
Company leases various office equipment under multiple capital leases that expire in 2016 and 2018. The equipment has a cost of
$66,271.

Minimum
future lease payments under the capital leases at December 31, 2014 for each of the next four years and in the aggregate are as
follows:

Year
Ending December 31,

2015

$

20,888

2016

12,340

2017

3,790

2018

2,842

Total
minimum lease payments

39,860

Less
amount representing interest

(2,245

)

Present
value of net minimum lease payments

$

37,615

The
effective interest rate charged on the capital leases range from approximately 2.25% to 7.428% per annum. The leases provide for
a $1 purchase option. Interest charged to operation for the three months ended December 31, 2014 and 2013 was $298 and $222, respectively.
Depreciation charged to operation for the three months ended December 31, 2014 and 2013 was $3,165 and $2,656, respectively.

11.

Income Taxes

As
of December 31, 2014, the Company has a net operating loss carryover of approximately $38,500,000 available to offset future income
for income tax reporting purposes, which will expire in various years through 2034, if not previously utilized. However, the Company’s
ability to use the carryover net operating loss may be substantially limited or eliminated pursuant to Internal Revenue Code Section 382.

We
adopted the provisions of ASC 740-10-50, formerly FIN 48, “Accounting for Uncertainty in Income Taxes.” We had no
material unrecognized income tax assets or liabilities for the three months ended December 31, 2014 or for the three months ended
December 31, 2013.

Our
policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify
them for tax purposes. During the three ended December 31, 2014 and 2013, there were no federal income tax, or related interest
and penalty items in the income statement, or liability on the balance sheet. We file income tax returns in the U.S. federal jurisdiction
and various state jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for
years ending on or before September 30, 2011 or California state income tax examination by tax authorities for years ending on
or before September 30, 2010. We are not currently involved in any income tax examinations.

12

SITO MOBILE, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12.

Convertible Debt

December 31,
2014

September 30,
2014

Notes Payable:

Convertible term note (a)

$

-

$

1,700,000

Convertible term note (b)

-

275,000

Convertible term note (c)

-

1,030,000

Convertible term note (d)

-

255,000

Convertible term note (e)

-

448,000

Principal balance

-

3,708,000

Accrued Interest

-

582,899

-

4,290,899

Less: discount on debt

-

(-

)

-

4,290,899

Less: current portion

(-

)

(4,290,899

)

Long term debt

$

-

$

-

a)

In
November and December 2011, the Company entered into convertible term notes bearing interest at 10% per annum with a maturity
date of August 31, 2014 and issued warrants to purchase 3,600,000 shares of the Company’s common stock at $0.25 per
share that expires on September 7, 2015. The notes provided for conversion of the outstanding principal
and the first year’s accrued interest, in the amount of $170,000, into shares of common stock at a conversion price
of $0.50 per share at the option of the holders, In October 2014, the Company repaid
the notes in full with a cash payment.

b)

On
September 7, 2012, the Company entered into convertible term notes bearing interest at 10% per annum, payable semi-annually,
with principal having a maturity date of September 7, 2014 and issued warrants to purchase 550,000 shares of the Company’s
common stock at $0.25 per share that expires on September 17, 2015. The notes provided for conversion of the outstanding
principal into shares of common stock at a conversion price of $0.50 per share at the option of the holders. In
October 2014, the Company repaid the notes in full with a cash payment.

c)

On
September 27, 2012, the Company entered into convertible term notes bearing interest at 10% per annum, payable semi-annually,
with principal having a maturity date of September 27, 2014 and issued warrants to purchase 2,060,000 shares of the Company’s
common stock at $0.25 per share that expires on September 27, 2015. The notes provided for conversion of the outstanding
principal into shares of common stock at a conversion price of $0.50 per share at the option of the. In
October 2014, the Company repaid the notes in full with a cash payment.

d)

On
September 28, 2012, the Company entered into convertible term notes bearing interest
at 10% per annum, payable semi-annually, with principal having a maturity date of September
28, 2014 and issued warrants to purchase 510,000 shares of the Company’s common
stock at $0.25 per share that expires on September 28, 2015. The notes provided for conversion
of the outstanding principal into shares of common stock at a conversion price of $0.50
per share at the option of the holders. In October
2014, the Company repaid the notes in full with a cash payment.

e)

On
October 5, 2012, the Company entered into convertible term notes bearing interest at
10% per annum, payable semi-annually, with principal having a maturity date of October
5, 2014 and issued warrants to purchase 896,000 shares of the Company’s common
stock at $0.25 per share that expires on October 5, 2015. The notes provided for conversion
of the outstanding principal into shares of common stock at a conversion price of $0.50
per share at the option of the holders. In October
2014, the Company repaid the notes in full with a cash payment.

In
connection with the 2012 private offering of convertible term notes, the Company incurred offering costs totaling $424,843 including
the fair value of warrants issued to the Placement Agent to purchase 479,920 shares of the Company’s common stock at a purchase
price of $0.304 per share. The value of the warrants of $166,319 was calculated using the Binomial Option model with a risk-free
interest rates ranging from 0.31% to 0.34%, volatility ranging from 94.17% to 95.23%, and trading prices ranging from $0.28 to
$0.33 per share. The $424,843 was amortized over the two-year term of the related debt using the effective interest method.

The
convertible term notes were recorded net of discounts that include the relative fair value of the warrants, the notes’ beneficial
conversion features, and the above indicated loan fee, all totaling $1,530,415. The discounts were amortized to interest expense
over the term of the various notes using the effective interest method. The initial value of the warrants of $1,124,773
issued to investors was calculated using the Binomial Option model with a risk-free interest rates ranging from 0.31% to 0.43%,
volatility ranging from 94.17% to 103.00%, and trading prices ranging from $0.22 to $0.35 per share. The beneficial conversion
feature of $51,516 was calculated using trading prices ranging from $0.26 to $0.35 per share and an effective conversion price
$0.0322 per share.

Interest
expense on the convertible term notes for the three months ended December 31, 2014 and 2013 was $1,950 and $94,722, respectively.
Amortization of the discounts for the three months ended December 31, 2014 and 2013 totaled $0 and $288,379, respectively, which
was charged to interest expense.

13

SITO MOBILE, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13.

Note Payable

December 31,
2014

September 30,
2014

Notes Payable:

Principal outstanding

$

10,000,000

$

-

Accrued Interest

49,526

-

Accrued Termination Fee

27,342

10,076,868

-

Less: discount on note payable

(1,521,103

)

(-

)

8,555,765

-

Less: current portion

(1,000,002

)

-

Long-term portion

$

7,555,763

$

-

On
October 3, 2014 (the “Effective Date”), the Company and its wholly owned subsidiaries, , SITO Mobile Solutions Inc.,
SITO Mobile R&D IP, LLC, entered into a Revenue Sharing and Note Purchase Agreement (the “Agreement”) with Fortress
Credit Co LLC, as collateral agent (the “Collateral Agent”), and CF DB EZ LLC (the “Revenue Participant”)
and the Fortress Credit Co LLC (the “Note Purchaser” and together with the Revenue Participant, (the “Investors”).

On
the Effective Date, the Company issued and sold a senior secured note (the “Note”) with an aggregate original principal
amount of $10,000,000 (the “Original Principal Amount”) and issued, pursuant to a Subscription Agreement, 2,619,539
new shares of common stock to Fortress at $0.3817 per share (which represents the trailing 30-day average closing price) for an
aggregate amount of $1,000,000. After deducting original issue discount of 10% on the Notes and a structuring fee to the Investors,
the Parent received $9,850,000 before paying legal and due diligence expenses.

The
Original Principal Amount of the Note bears interest at a rate equal to LIBOR plus 9% per annum. Such interest is payable in cash
except that 2% per annum of the interest shall be paid-in-kind, by increasing the principal amount of the Notes by the amount
of such interest. The term of the Notes is 42 months and the Company must make, beginning in October 2015, monthly amortization
payments on the Notes, each in a principal amount equal to $333,334 until the Note is paid in full. The Company shall also apply
85% of Monetization Revenues (as defined in the Agreement) from the Company’s patents to the payment of accrued and unpaid
interest on, and then to repay outstanding principal (at par) of, the Notes until all amounts due with respect to the Notes have
been paid in full. After the repayment of the Notes, in addition to the interest, the Company shall pay the Revenue Participants
up to 50% of Monetization Revenues totaling (i) $5,000,000, if paid in full prior to March 31, 2018 and (ii) $7,500,000 thereafter
(the “Revenue Stream”). The Company must also pay $350,000 to the Note Purchasers upon repayment of the Notes.

The
Company may prepay the Notes in whole or in part, without penalty or premium, except that any optional prepayments of the Notes
prior to the first anniversary of the Effective Date shall be accompanied by a prepayment premium equal to 5% of the principal
amount prepaid

The
Agreement contains certain standard Events of Default. The Company granted to the Collateral Agent, for the benefit of the Secured
Parties, a non-exclusive, royalty free, license (including the right to grant sublicenses) with respect to the Patents, which
shall be evidenced by, and reflected in, the Patent License Agreement. The Collateral Agent and the Investors agree that the Collateral
Agent shall only use such license following an Event of Default. Pursuant to the Security Agreement, the Company granted the Investors
a first priority senior security interest in all of the Company’s assets. The Company and the Investors assigned a value
of $500,000 to the revenue sharing terms of the Agreement and in accordance with ASC 470-10-25 “Debt Recognition”,
the Company recognized $500,000 as deferred revenue and a discount on the Note that is amortized over the 42-month term of the
Note using the effective interest method. For the three months ended December 31, 2014, the Company recognized $39,060 in licensing
revenue and interest expense from amortization of the deferred revenue.

Interest
expense on note for the three months ended December 31, 2014 and 2013 was $247,629 and $0, respectively. Amortization of the discounts
for the three months ended December 31, 2014 and 2013 totaled $128,897 and $0, respectively, which was charged to interest expense.
Accrual of termination fees for the three months ended December 31, 2014 and 2013 was $27,342 and $0, respectively, which was
charged to interest expense.

14

SITO MOBILE, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14.

Stock Based Compensation

During
the three months ended December 31, 2014, the Company recognized stock-based compensation expense totaling $180,814, of which
$99,267 was recognized through the vesting of 1,250,000 common stock options, and $81,547 from the amortization of prepaid consulting
fees compensated through the granting of 5,750,000 options (See Note 5). During the three months ended December 31, 2013, the
Company recognized stock-based compensation expense totaling $841,706, of which $569,095 was recognized through the vesting of
4,000,000 common stock options, and $272,611 from the amortization of prepaid consulting fees compensated through the granting
of 5,750,000 options (See Note 5).

15.

Related Party Transactions

Effective
December 13, 2013, the former Executive Chairman’s employment under the employment agreement by and between the Company
and the former Executive Chairman, or otherwise, was terminated. Pursuant to a Separation Agreement and General Release
dated April 9, 2014, the former Executive Chairman resigned from the Board of Directors. For the three months ended
December 31, 2014, the Company paid $100,851 representing the remaining severance obligation costs.

The
Company entered into a Separation and General Release Agreement (the “Separation Agreement”) with its former Chief
Executive Officer, which confirmed his removal from all positions held with the Company, including its subsidiaries, divisions,
affiliates, partnerships, joint ventures and related business entities, effective September 19, 2014. Pursuant to the terms of
the Separation Agreement and in accordance with the terms of his employment agreement, the Company will pay to Mr. Orsini, one
year of his base salary, accrued but unused vacation time and will provide continued medical coverage for a period of one year.
In addition, the Company will reimburse Mr. Orsini for $10,000 for his attorneys’ fees in connection with his Separation
Agreement. In exchange for these payments, and other provisions, Mr. Orsini agreed to a general release in favor of the Company.
The Separation Agreement became effective September 19, 2014. For the three months ended December 31, 2014, the Company paid $107,410
under terms of the Separation Agreement and has accrued $350,441 in remaining obligations.

On
November 10, 2014, the Company granted options to a Director to purchase 250,000 of Company common stock at a purchase price of
$0.303 per share expiring November 10, 2019. The 250,000 options were valued at $48,325 under the Binomial Option Model using
a trading price of $0.29 per share, a risk free interest rate of 1.65%, and volatility of 102.66%. The options immediately vested
upon grant and the $48,325 was fully charged to operations on the date of grant.

On
November 21, 2014, the Company granted options to an employee to purchase 150,000 of Company common stock at a purchase price
of $0.2805 per share expiring November 21, 2019. The 150,000 options were valued at $28,230 under the Binomial Option Model using
a trading price of $0.26 per share, a risk free interest rate of 1.60%, and volatility of 100.62%. The options vest in increments
of 50,000 shares over a three-year period and the $28,230 is charged to operations over the vesting period of the options.

On
November 21, 2014, the Company granted options to an employee to purchase 380,000 of Company common stock at a purchase price
of $0.2805 per share expiring November 21, 2019. The 380,000 options were valued at $71,516 under the Binomial Option Model using
a trading price of $0.26 per share, a risk free interest rate of 1.60%, and volatility of 100.62%. The options vest in increments
of 126,667 shares over a three-year period and the $71,516 is charged to operations over the vesting period of the options.

On
November 21, 2014, the Company approved a compensation plan for the executive officers of the Company which provides for
the payment of a cash bonus and an equity grant of performance options to the Company’s Chief Executive Officer and
its Chief Financial Officer (the “Executives”). Each Executive is eligible for an annual cash bonus, based upon
net revenue, gross margins, and individual key performance indicators, set annually by the Company’s Compensation
Committee (the “Target Performance”). The target
bonus for the Chief Executive Officer (“CEO”) is 50% of his base salary and for the Chief Financial Officer
(“CFO”), the target bonus is 40% of his base salary. Eighty percent of the cash bonus is based upon the target
net revenues and gross margins of the Company with 20% of the cash bonus based upon individual key performance indicators.
Fifty percent of the target cash bonus will be paid if threshold performance of 80% of the Target Performance is achieved,
100% of the target cash bonus will be paid if the Target Performance is reached, with 150% of the cash bonus paid if 120% of
the Target Performance is achieved. As of December 31, 2014, the Company has accrued $42,281 in compensation expense for the
potential incentive cash bonuses. The equity grant component of the compensation plan provides for the grant of 1,050,000
performance options to purchase shares of Company common stock to the CEO and 420,000 performance options
to purchase shares of Company common stock to the CFO, with the number of performance options to be
received by each of the Executives based upon the achievement by the Company of certain net revenues and gross margins
targets. The performance options will vest in three year increments commencing on the grant date and are exercisable at a
price of $0.2805. As of December 31, 2014, the Company has accrued $5,495 in stock compensation expense for the potential
incentive stock option bonuses.

15

SITO MOBILE, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On
December 15, 2014 the Company granted options to 21 employees to purchase an aggregate of 435,000 shares of Company common stock
at a purchase price of $0.25 per share expiring December 15, 2019. The 435,000 options were valued at $72,341 under the Binomial
Option Model using a trading price of $0.23 per share, a risk free interest rate of 1.64%, and volatility of 100.54%. The options
vest in increments of 145,000 shares over a three-year period and the $72,340.50 is charged to operations over the vesting period
of the options.

16.

Fair Value

The
Company’s financial instruments at December 31, 2014 and 2013 consist principally of notes payable and convertible debentures.
Notes payable and convertible debentures are financial liabilities with carrying values that approximate fair value. The
Company determines the fair value of notes payable and convertible debentures based on the effective yields of similar obligations.

The
Company believes all of the financial instruments’ recorded values approximate fair market value because of their nature
and respective durations.

ASC
820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that distinguishes between
(1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and
(2) an entity’s own assumptions, about market participant assumptions, which are developed based on the best information
available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority
to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:

Level
1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability
to access.

Level
2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities
in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially
the full term of the assets or liabilities.

Level
3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of
the assets or liabilities.

The
Company utilizes the best available information in measuring fair value. The following table summarizes, by level within the fair
value hierarchy, the financial assets and liabilities recorded at fair value on a recurring basis as follows:

December
31, 2014:

Fair Value Measurements

Level 1

Level 2

Level 3

Total Fair Value

Assets:

Accounts receivable, net

$

-

$

3,613,956

-

$

3,613,956

Liabilities:

Note payable

$

-

$

8,555,765

-

$

8,555,765

Purchase price payable

$

-

$

1,000,000

-

$

1,000,000

Obligation under capital lease

$

-

$

37,615

-

$

37,615

September
30, 2014:

Fair Value Measurements

Level 1

Level 2

Level 3

Total Fair Value

Assets:

Accounts receivable, net

$

-

$

2,893,308

-

$

2,893,308

Liabilities:

Convertible debentures

$

-

$

4,290,899

-

$

4,290,899

Obligation under capital lease

$

-

$

29,379

-

$

29,379

16

SITO MOBILE, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

17.

Stockholders’ Equity

Common
Stock

The holders
of the Company's common stock are entitled to one vote per share of common stock held.

During
the three months ended December 31, 2014, the Company issued 2,619,539 shares of common stock for which the Company received $1,000,000
in gross proceeds.

During
the three months ended December 31, 2013, The Company issued 5,495,957 shares of its common stock of which 1,725,000 shares were
issued for warrants exercised for which the Company received $138,000 in gross proceeds, 147,981 shares were issued for cashless
exercises of common stock options, 3,597,976 shares were issued for 3,597,976 stock options exercised for which the company received
$1,687,197 in gross proceeds, and 25,000 shares were issued to the Company’s Chief Financial Officer pursuant to the Company’s
November 1, 2013 Employment Agreement with him.

Warrants

During
the three months ended December 31, 2014, no warrants were granted or exercised, and 3,600,000 warrants expired.

Options

On
November 10, 2014, the Company granted options to a newly appointed Director to purchase 250,000 of Company common stock at a
purchase price of $0.303 per share that expires November 10, 2019. The 250,000 options were valued at $48,325 under the Binomial
Option Model using a trading price of $0.29 per share, a risk free interest rate of 1.65%, and volatility of 102.66%. The options
immediately vested and the $48,325 was fully charged to operations on the date of grant.

On
November 21, 2014, the Company granted options to an Employee to purchase 150,000 of Company common stock at a purchase price of
$0.2805 per share that expire on November 21, 2019. The 150,000 options were valued at $28,230 under the Binomial Option Model
using a trading price of $0.26 per share, a risk free interest rate of 1.60%, and volatility of 100.62%. The options vest in increments
of 50,000 shares over a three-year period and the $28,230 is charged to operations over the vesting period of the options.

On
November 21, 2014, the Company granted options to an Employee to purchase 380,000 of Company common stock at a purchase price of
$0.2805 per share expiring November 21, 2019. The 380,000 options were valued at $71,516 under the Binomial Option Model using
a trading price of $0.26 per share, a risk free interest rate of 1.60%, and volatility of 100.62%. The options vest in increments
of 126,667 shares over a three year period and the $71,516 is charged to operations over the vesting period of the options.

On
December 15, 2014, the Company granted 21 employees options to purchase an aggregate of 435,000 shares of Company common stock
at a purchase price of $0.25 per share expiring December 15, 2019. The 435,000 options were valued at $72,341 under the Binomial
Option Model using a trading price of $0.23 per share, a risk free interest rate of 1.64%, and volatility of 100.54%. The options
vest in increments of 145,000 shares over a three year period and the $72,341 is charged to operations over the vesting period
of the options.

A
summary of outstanding stock warrants and options is as follows:

Number of Shares

Weighted
Average
Exercise
Price

Outstanding – September 30, 2013

49,704,952

$

.48

Granted

2,150,000

$

.58

Exercised

(6,790,952

)

$

(.36

)

Cancelled

(5,225,000

)

$

(.55

)

Outstanding – September 30, 2014

39,839,000

$

.47

Granted

1,215,000

$

.27

Exercised

-

$

(-)

Cancelled

(9,650,000

)

$

(.34

)

Outstanding - December 31, 2014

31,404.000

$

.51

Of
the 31,404,000 options and warrants outstanding, 29,939,000 are fully vested and currently available for exercise.

17

SITO MOBILE, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

18.

Commitments and Contingency

Operating
Leases

The
Company leases office space in Rogers, Arkansas; Jersey City, New Jersey; and Boise, Idaho. The Rogers office is leased for a
term of five years, effective January 1, 2012. The Company’s Boise office space is subject to a 38-month lease that commenced
on May 1, 2014. The Jersey City office lease, amended on November 6, 2014, expires on November 30, 2018 and the Company has the
option to extend the term for an additional five years. In addition to paying rent, the Company is also required to pay its pro
rata share of the property’s operating expenses. Rent expense for the three months ended December 31, 2014 and 2013 was
$56,616 and $56,195, respectively. Minimum future rental payments under non-cancellable operating leases with terms in excess
of one year as of December 31, 2014 for the next five years and in the aggregate are:

2015

$

326,687

2016

327,545

2017

269,982

2018

235,224

2019

-

$

1,159,438

Employment
Agreement

Pursuant to the Company’s
employment agreement with its CFO dated October 18, 2013; the Company pays the CFO an annual salary of $200,000. The employment
agreement also calls for successive one-year renewals unless either party elects against renewal. The CFO can also receive discretionary
cash bonuses. Pursuant to the employment agreement, the CFO received a grant of 25,000 shares of Company common stock under our
2009 Employee and Consultant Stock Plan, with restrictions that expired 180 days after the CFO remained employed with the Company.
The CFO also received stock options under the Company’s 2010 Stock Option Plan to purchase 750,000 shares of Company common
stock at a strike price of $0.62, expiring on November 1, 2018. The stock options vest annually in equal installments of 250,000
over a three-year period commencing on November 1, 2014.

19.

DoubleVision Acquisition

On
July 24, 2014, the Company acquired all of the outstanding capital stock of DoubleVision, a provider of mobile media for
clients looking to place advertisements in mobile devices based on real-time data. With this acquisition, the
Company integrated DoubleVision’s ability to provide real-time advertising in its mobile media market with
the Company’s product offerings. The contractual price for the acquisition was $3,680,000 million by issuing
8,000,000 shares of the Company’s common stock to DoubleVision’s shareholders at an agreed-upon valuation of $.41
per share, plus a cash payment of $400,000 to one of DoubleVision’s creditors.

In addition
to the initial purchase price, the agreement calls for $1,000,000 in contingent consideration based on the Company achieving $3,000,000
in media placement revenue in the twelve months ended July 31, 2014. At December 31, 2014, the Company recorded the additional
$1,000,000 purchase price payable in anticipation of achieving the revenue milestone.

As
of December 31, 2014, the allocation of the purchase price to the assets acquired and liabilities assumed on the acquisition date
was as follows:

Cash and cash equivalents

$

10,102

Accounts receivable

43,574

Note receivable

10,000

Machinery and equipment

21,764

Software development costs

260,524

Security deposit

6,150

Goodwill

4,482,884

Accounts payable

(154,998

)

Total purchase price

$

4,680,000

The
following table summarizes the fair value of identifiable intangible assets acquired:

Software development costs

$

260,524

Total intangible assets acquired, excluding goodwill

$

260,524

The
excess of the fair value of the total consideration over the estimated fair value of the net assets was recorded as goodwill,
which was primarily attributable to the synergies expected from combining the technologies, including complementary products that
will enhance the Company’s overall product portfolio, and the value of the workforce that became Company employees following
the closing of the acquisition. The goodwill recognized is not deductible for income tax purposes.

18

SITO MOBILE, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Pro
forma Information

The
following unaudited pro forma information presents the consolidated results of operation of the Company as if the acquisition
completed during the year ended September 30, 2014 had occurred at the beginning of the applicable annual reporting period, with
pro forma adjustments to give effect to intercompany transactions to be eliminated, amortization of intangible assets, share-based
compensation, and transaction costs directly associated with the acquisition:

Net revenue

$

10,681,740

Net loss

(4,046,089

)

Net loss per share

(0.03

)

Net loss per share-diluted

(0.03

)

These
unaudited pro forma condensed consolidated financial results have been prepared for illustrative purposes only and do not
purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the first
day of the earliest period presented, or of the future results of the consolidated entities. The unaudited pro forma consolidated
financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of
the acquisition.

20.

Subsequent Events

On
January 20, 2015, the Company entered into an Asset Purchase Agreement (the “APA”) with Hipcricket, Inc.
(“Hipcricket”) pursuant to which the Company will acquire (the “Sale”) substantially all of the
assets of Hipcricket (the “Assets”). Hipcricket has filed a voluntary petition under Chapter 11 in the United
States Bankruptcy Court ("Court") for the District of Delaware along with a motion seeking authorization to approve
bid procedures under Section 363 of the U.S. Bankruptcy Code (the “Bankruptcy Proceeding”). The Company will bid
as the "stalking horse" bidder to acquire the Assets for aggregate consideration of approximately $4.5 million,
plus certain additional consideration as approved or required by the Court less the DIP Obligations (as defined below). The
Sale is expected to be conducted under the provisions of the Bankruptcy Code and will be subject to receipt of a higher bid
at auction. Subject to approval of the Court, the Company shall act as the “stalking horse” bidder for the
Assets. Additionally, the APA requires Hipcricket to pay a break-up fee to the Company equal to $225,000 upon the
consummation of a sale of a material portion of Hipcricket’s assets to a third party. The APA also provides for
reimbursement of $100,000 of expenses incurred by the Company in connection with the APA. The closing of the purchase of the
Seller’s Assets and the terms and conditions of the APA are subject to certain conditions, including approval of the
Court. Additionally, on January 23, 2015, the Company and Hipcricket entered into a debtor-in-possession note (the
“DIP Note”) pursuant to which the Company agreed to loan Hipcricket $3,500,000 to support Hipcricket’s
ongoing operations during the Bankruptcy Proceeding, $2,200,000 of which shall be transferred to Hipcricket immediately. Such
DIP Note is subject to Court approval. The outstanding principal of the DIP Note shall accrue interest at a rate of 13% per
annum. The interest and outstanding principal shall be due and payable on the earlier to occur of (i) the date the Sale is
consummated; (ii) April 3, 2015; (iii) upon acceleration of the DIP Note pursuant to the terms of the APA; and (iv) the
termination date (the “Maturity Date”). On the Maturity Date, the Company’s obligation as the DIP lender to
provide Loans shall terminate.

On
January 30, 2015, the Company issued 350,000 shares of common stock valued at $70,000 as payment to a third party for consulting
services.

This
report contains forward-looking statements. These forward-looking statements include, without limitation, statements containing
the words “believes,”“anticipates,”“expects,”“intends,”“projects,”“will,”
and other words of similar import or the negative of those terms or expressions. Forward-looking statements in this report include,
but are not limited to, expectations of future levels of research and development spending, general and administrative spending,
levels of capital expenditures and operating results, sufficiency of our capital resources, our intention to pursue and consummate
strategic opportunities available to us, including sales of certain of our assets. Forward-looking statements subject to certain
known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These
risks and uncertainties include, but are not limited to those described in “Risk Factors” of the reports filed with
the Securities and Exchange Commission.

The
following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere
herein.

Overview

We provide a mobile engagement platform
that enables brands to increase awareness, loyalty, and ultimately sales.

Our
business has focused on leveraging our solution in the areas of messaging/notifications and media placement on mobile devices.
Our Verified Walk-In platform is a proprietary attribution technology that utilizes geo-fencing to reach customers within a certain
radius of location and uses technology to push coupons, advertisements, and promotions to mobile apps and mobile websites in real-time,
allowing for a more accurate advertising approach. This technology identifies consumers who visit physical storefronts after seeing
advertisements that we serve. This platform allows our clients to assess mobile-to-offline attribution allowing the ability to
quantify and measure the impact of campaigns on in-store visits, leveraging real-time insights on campaign performance through
key metrics such as user demographics, psychographics, visitation rates, click-through and time of engagement.

Our
portfolio of intellectual property represents our many years’ innovation in the wireless industry through patented technology
that we developed, as well as patented technology we purchased from Microsoft and others. We are dedicated to the monetization
of our patents, primarily through licensing agreements that allow others to use our patents in exchange for royalty income and
other consideration.

During
the fiscal year ended September 30, 2014, we continued reducing our negative cash flows from operations as a result of 27% growth
in revenues and improving our gross margin percentage from 57% to 64%. During the fiscal year ended September 30, 2014, on a pro-forma
basis when separating out intellectual property related initiatives, our core, underlying business generated positive operating
profits and positive cash flow, a trend that was established during fiscal year ended September 30, 2013.

On
July 24, 2014, we acquired all of the shares of DoubleVision Networks, Inc. (“DoubleVision”). We paid
$3.6 million for DoubleVision by issuing 8,000,000 shares of the Company’s common stock to the Sellers at an
agreed-upon valuation of $0.45 per share. We also agreed to pay $400,000 to one of DoubleVision’s creditors.
Substantially all of the Double Vision shareholders are subject to lockup agreements that restrict the sale of the shares
acquired for at least one year. The purchase price may be reduced subject to certain conditions related to
DoubleVision’s liabilities. The Double Vision shareholders also have an earn –out provision which could cause us
to issue additional shares of our common stock equal to $1,000,000 (valued at the average closing price for the ninety days
ending July 31, 2015) to the Sellers if our media placement revenues for the twelve-month period from August 1, 2014 to July
31, 2015 are at least $3,000,000, subject to certain conditions such as receipt of customer payments and achievement of a
gross margin threshold. In anticipation of achieving the conditions for payment of the earn-out amount, we accrued the
additional $1,000,000 in purchase price.

20

On
January 20, 2015, we entered into an asset purchase agreement (the "Agreement") with Hipcricket Inc.
(“Hipcricket”) to acquire substantially all of its assets for $4.5 million in cash. Hipcricket provides an
end-to-end, data driven mobile engagement and analytics solution that empowers brands, agencies and media companies to drive
customer engagement, loyalty and sales. Hipcricket’s proprietary, scalable and user friendly AD LIFE®
software-as-a service platform creates measurable, real-time, one-to-one relationships between companies and their current or
prospective customers, using text messages, multimedia messages, mobile web sites, mobile applications, mobile coupons, quick
response codes and via mobile advertising. Hipcricket reported revenues of $26.7 million for the fiscal year ended February
28, 2014 and currently holds 21 U.S. patents covering technology inventions. The Agreement provides that we will offer
employment to all of Hipcricket's employees. Subject to the closing of the transaction, we intend to continue to provide
services and support to existing Hipcricket customers. As part of the transaction, Hipcricket’s Chairman and Chief
Executive Officer, Todd Wilson, intends to join SITO Mobile during the transition for a period of six to twelve months. On
January 20, 2015, Hipcricket filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court
for the District of Delaware to facilitate the Agreement. The transaction is subject to a Bankruptcy Court supervised process
under Section 363 of the Bankruptcy Code and is subject to an auction and Bankruptcy Court approval. The Agreement comprises
the initial "stalking-horse bid" in the auction process, which is subject to higher and better offers. In
addition, we are providing debtor-in-possession financing to support Hipcricket's ongoing operations during the
bankruptcy.

As
we expand operational activities and seek new opportunities to monetize our patented technology, we may from time to
time experience operating losses and/or negative cash flows from operations and we may be required to obtain additional
financing to fund operations. There can be no assurance that such financing will be available to us. We are heavily reliant
on the revenue we generate from a single customer relationship. Our core mobile media business operates in a relatively new
and evolving industry that seeks to gain a larger share of business spending which has traditionally been directed
toward older established media solutions. There can be no assurance that we will be successful in addressing these challenges
and others that we face, and the failure to do so can have a material adverse effect on our business prospects,
financial condition and results of operations.

Results
of Operations

Results
of Operations for the Three Months Ended December 31, 2014 and 2013

During
the three months ended December 31, 2014, our revenue increased by approximately 32% over revenue generated during the three months
ended December 31, 2013 ($3,847,436 in the three months ended December 31, 2014 compared to $2,907,128 in the three months ended
December 31, 2013).

Of
our revenue earned during the three months ended December 31, 2014, approximately 64% was generated from contracts with seven
customers covered under our master services agreement with AT&T. Of our revenue earned during the quarter ended
December 31, 2013, approximately 74% was generated from contracts with six customers covered under our master services agreement
with AT&T and 26% was generated from our agreement with Zoove Cooperation.

Our
cost of revenue, which represent the direct out-of-pocket costs associated with wireless applications and media placement
revenues, increased $828,254 or 95% to $1,696,347 for the three months ended December 31, 2014 as compared to $868,093 for
the three months ended December 31, 2013. Our cost of revenue varies substantially in line with wireless applications and
media placement revenues and our increased cost of revenue for the three months ended December 31, 2014 as compared to the
three months December 31, 2013 was the result of the 72% increase in those revenues over the same
comparable periods.

Our
gross profit represents our total revenue less our cost of sales. For the three months ended December 31, 2014 and
2013, our gross profit was $2,151,089 and $2,039,035, an increase of $112,054 or 5%. We do not have cost of revenue associated
with our licensing and royalties revenue. When excluding licensing and royalties revenue for the three-months ended December 31,
2014, our gross margin was 54% as compared to a gross margin of 60% for the three months ended December 31, 2013. Our media placement
business generated a 47% gross margin for the three months ended December 31, 2014 as compared to our wireless applications business
that generated a 58% gross margin for that period. For the three months ended December 31, 2014, our media placement revenues
comprised 33.5% of total revenue and contributed more to our overall gross margin as compared to the three months ended December
31, 2014 when media placement revenue comprised 0.3% of total revenue.

21

General and
administrative expense, excluding stock based compensation, was $1,197,809 for the three months ended December 31, 2014 as compared
to $1,654,932 for the three months ended December 31, 2013, an decrease of $457,123 or 28%, that is primarily attributable to our
accruing $423,487 in one-time compensation expense in the three months ended December 31, 2013 in connection with terminating
our employment agreement with our former Executive Chairman on December 13, 2013.

Sales and
marketing expense, excluding stock based compensation, was $692,279 for the three months ended December 31, 2014 as compared to
$227,560 for the three months ended December 31, 2013, an increase of $464,719 or 204%, that is primarily attributable to increased
sales and marketing spending in connection with our media placement business that we launch in December 2013 and expanded following
the DoubleVision acquisition in July 2014.

Research
and Development expense decreased from $24,093 in the three months ended December 31, 2013 to $10,316 in the three months ended
December 31, 2014, representing less than 1% of revenues, a level that is consistent with past periods.

For the three months ended
December 31, 2014, total stock based compensation expense decreased 79% to $180,814 from $841,706 for the three months ended December
31, 2013. The decrease is attributable to fewer stock based compensation issuances as part of our effort to reduce the number
of issued and potentially issuable shares of our common stock.

Interest
expense for the three months ended December 31, 2014 and 2013 was $417,378 and $192,720, respectively, an increase of $224,658
or 117%. The increase in interest expense is attributable to the increase in the outstanding principal of our debt. In October
2014, we sold a secured $10,000,000 42-month note having an interest rate of LIBOR, which was 0.11% as of December 31, 2014, plus
9%. Included in interest expense for the three months ended December 31, 2014 is $156,239 in amortization of discounts on the
debt for a structuring fee, termination fees and the rights assigned to the note holder to share in our potential future new
intellectual property monetization revenue streams.

Our
net loss for the three months ended December 31, 2014 was $536,251 as compared to a net loss of $1,051,733 for the three months
ended December 31, 2013, a decrease of $515,482 or 49% that is primarily attributable to the $740,140 improvement in our latest
quarter’s net results from operations that was partially offset by the $224,658 increase in interest expense over the comparable
periods. Excluding stock based compensation, our net loss for the three month periods ended December 31, 2014 and 2013 were $355,437
and $210,027, respectively. Our earnings before interest, taxes, depreciation and amortization or EBITDA that was $69,871 for
the three months ended December 31, 2014 as compared to a loss of ($709, 256) on an EBITDA basis for the three months ended December
31, 2013.

Our net
result on a basic and fully diluted basis was $0.00 per share the three months ended December 31, 2014 based on our weighted average
shares outstanding of 153,262,747 as compared to a net loss of $0.01 per share for the three months ended December 31, 2013. The
increase in the number of weighted shares outstanding primarily reflect the issuance of 5,772,457 shares for stock options and
warrants exercised during the quarter ended December 31, 2013, the 8,000,000 shares for the acquisition of DoubleVision in July
2014 and 2,619,539 shares sold to Fortress Credit Co LLC (“Fortress”) at $0.3817 per share in October 2014.

22

Liquidity
and Capital Resources

At
December 31, 2014, we had total assets of $16,935,019 and total liabilities of $13,720,784. At September 30, 2014, we had
total assets of $10,106,768 and total liabilities of $7,450,054. As of September 30, 2013, we had total assets of $6,523,206
and total liabilities of $5,398,842. The $6,828,251 or 68% increase in assets is primarily attributable to the
$4,868,487 increase in cash from sale of a long-term secured note and our common stock to Fortress that was partially offset
by repayments of all principal and interest due on our convertible debentures that matured, $4,482,884 increase in goodwill
from the DoubleVision acquisition and $720,648 increase in accounts receivable attributable to increased revenues. At
December 31, 2014, we had cash of $5,488,672 as compared to $620,185 at September 30, 2013, an increase of $4,868,487. The
$6,270,730 increase in liabilities in the year since September 30, 2014 is largely due to the net increase in our outstanding
debt resulting from our sale of a long-term note to Fortress and repayment of our convertible debentures and the anticipated
$1,000,000 increase purchase price payable for the DoubleVision acquisition that will be paid with shares of our common stock
should we generate $3,000,000 in media placement revenue for the twelve months ended July 31, 2015 and achieve certain gross
margin thresholds, which we now expect to occur.

During
the three ended December 31, 2014, we used $236,704 in cash for operating activities as compared to the $358,280 that we used
for operating activities during the three months ended December 31, 2013.

Cash
used in investing activities for the three months ended December 31, 2014 was $387,701, of which $246,791 represented the capitalized
internal costs of our software development for our core operations and $119,067 represents investments in our IP that is designed
to strengthen our IP portfolio and expand our mobile communications/advertising offerings, which were increased levels of investment
as compared to the three months ended December 31, 2014.

Cash provided
from financing activities for the three months ended December 31, 2014 totaled $5,492,892. We received $8,205,816 from the sale
of our note to Fortress, net of fees and expenses, $1,000,000 from issuances of our common stock to Fortress and used those proceeds
to repay $3,708,000 in principal plus accrued interest on outstanding convertible notes that had a 10% interest rate and gave the
note holders’ the right to convert in the debentures into 7,756,000 shares of our common stock.

On
October 3, 2014,we, together with our wholly owned subsidiaries SITO Mobile Solutions, Inc. and SITO Mobile
R&D IP entered into a Revenue Sharing and Note Purchase Agreement with Fortress Credit Co LLC, CF DB EZ LLC and Fortress
Credit Co LLC pursuant to which we issued and sold a senior secured note with an aggregate original principal amount of
$10,000,000 and sold 2,619,539 newly issued shares of common stock to Fortress at $0.3817 per share. After deducting original
issue discount of 10% on the Note and a structuring fee to the Investors, we received $9,850,000 before paying legal and due
diligence expenses.

Our
note payable to Fortress bears interest at a rate equal to LIBOR plus 9% per annum of which 2% per annum of the interest is paid
with our common stock at maturity. The term of the Note is 42 months and we began making monthly interest payments in October
2014, and beginning in October 2015, monthly amortization payments on the Note, each in a principal amount equal to $333,334
until we repay the note in full. We agreed to apply 85% of any revenues from new licensing and royalty arrangements that we generate
using our patents (“Monetization Revenues”) to the payment of accrued and unpaid interest on, and then to repay outstanding
principal (at par) of, the notes until all amounts due with respect to the note have been paid in full. After the repayment of
the note, in addition to the interest, we will pay Fortress up to 50% of Monetization Revenues totaling (i) $5,000,000, if paid
in full prior to March 31, 2018 and (ii) $7,500,000 thereafter. We must also pay $350,000 to the Note Purchasers upon repayment
of the Note.

Over
the next twelve months we believe that existing capital and anticipated funds from operations are sufficient to sustain our current
level of operations.

Off-Balance
Sheet Arrangements

We have
no off-balance sheet arrangements or financing activities with special purpose entities.

23

Critical
Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses. We have identified the following accounting
policies that we believe are key to an understanding of ours financial statements. These are important accounting policies
that require management’s most difficult, subjective judgments.

Revenue
Recognition

Revenue
is recognized in accordance with Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements,
as revised by SAB No. 104. As such, the Company recognizes revenue when persuasive evidence of an arrangement exists, title transfer
has occurred, the price is fixed or readily determinable and collectability is probable. Sales are recorded net of sales discounts.

Non-monetary
Consideration Issued for Services

We
value all services rendered in exchange for our common stock at the quoted price of the shares issued at date of issuance or at
the fair value of the services rendered, whichever is more readily determinable. All other services provided in exchange for other
non-monetary consideration are valued at either the fair value of the services received or the fair value of the consideration
relinquished, whichever is more readily determinable.

Our
accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions
of ASC Topic 505-50, “Equity Based Payments to Non Employees.” The measurement date for the fair value of the equity
instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor
is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments
issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. In accordance
with ASC Topic 505, an asset acquired in exchange for the issuance of fully vested, non-forfeitable equity instruments should
not be presented or classified as an offset to equity on the grantor’s balance sheet once the equity instrument is granted
for accounting purposes. Accordingly, we record the fair value of non-forfeitable common stock issued for future consulting services
as prepaid services in our consolidated balance sheet.

Software Development Costs

We
account for our software development costs in accordance with ASC Topic 985-20, “Cost of Software to be Sold, Leased, or
Otherwise Marketed.” Under ASC Topic 985-20, we expense software development costs as incurred until we determine that the
software is technologically feasible. Once we determine that the software is technologically feasible, we amortize the costs capitalized
over the expected useful life of the software.

Long-Lived
Assets

We
account for our long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05, “Accounting
for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer
be appropriate. We assess recoverability of the carrying value of an asset by estimating the future net cash flows expected to
result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset,
an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.
We determined that none of our long-term assets at December 31, 2014 were impaired.

Fair
Value Measurement

The
Company complies with the provisions of ASC No. 820-10 (ASC 820-10), “Fair Value Measurements and Disclosures.” ASC
820-10 relates to financial assets and financial liabilities. ASC 820-10 defines fair value, establishes a framework for measuring
fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair
value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value
measurements and are to be applied prospectively with limited exceptions.

24

ASC
820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that distinguishes between
(1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2)
an entity’s own assumptions about market participant assumptions that are developed based on the best information available
in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable
inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:

Level
1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

Level
2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets
that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full
term of the assets or liabilities.

Level
3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of
the assets or liabilities.

Item
3 - Quantitative and Qualitative Disclosures About Market Risk

Not required
for Smaller Reporting Companies.

Item
4 - Controls and Procedures

Evaluation
of Disclosure Controls and Procedures

The Company’s
Principal Executive Officer and Principal Financial Officer have evaluated the effectiveness of our disclosure controls and procedures
as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange
Act”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded
that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that
information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed,
summarized and reported within the periods specified in the Commission’s rules and forms, and (2) accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial Officer or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.

Changes
in Internal Control over Financial Reporting

We have
not made a change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) during the fiscal quarter ended December 31, 2014 that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.

Internal
control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined
to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal
controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.

Under the
oversight of the Audit Committee, Management will continue to review and make any changes it deems necessary to the overall design
of the Company’s internal control over financial reporting, including implementing improvements in policies and procedures.
We are committed to a proper internal control environment and will continue to implement measures to improve the Company’s
internal control over financial reporting in response to our continued operational development.

25

PART
II - OTHER INFORMATION

Item
1 - Legal Proceedings

To the best
of our knowledge, we are not a party to any legal proceedings that, individually or in the aggregate, are deemed to be material
to our financial condition or results of operations.

Item
1A - Risk Factors

Our
Annual Report on Form 10-K for the year ended September 30, 2014, Part I –Item 1A, Risk Factors, describes important risk
factors that could cause our business, financial condition, results of operations and growth prospects to differ materially from
those indicated or suggested by forward-looking statements made in this Form 10-Q or presented elsewhere by management from time
to time.

There have
been no material changes in our risk factors since the filing of our Annual Report on Form 10-K for the year ended September 30,
2014.

Item
2 - Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item
3 - Defaults Upon Senior Securities

No disclosure
required.

Item
4 - Mine Safety Disclosures

No disclosure
required.

Item
5 - Other Information

No disclosure
required.

Item
6 - Exhibits

Index
to Exhibits

Exhibit
No.

Description

31.1*

Certification
of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

31.2*

Certification
of Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

32.1*

Certification
of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

32.2*

Certification
of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

101.INS**

XBRL Instance
Document.

101.SCH**

XBRL Taxonomy
Extension Schema Document.

101.CAL**

XBRL Taxonomy
Extension Calculation Linkbase Document.

101.DEF**

XBRL Taxonomy
Extension Definition Linkbase Document.

101.LAB**

XBRL Taxonomy
Extension Label Linkbase Document.

101.PRE**

XBRL Taxonomy
Extension Presentation Linkbase Document.

*

Filed
herewith

**

Furnished herewith

26

SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

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